World Bank condemns Nigeria’s spending on petrol subsidy

The World Bank has condemned the continued spending by Africa’s biggest economy on petrol subsidy, which could hit N3 trillion in 2021.

Shubham Chaudhuri, country director for Nigeria, speaking during a panel session at the ongoing NES27, said Nigeria could channel the money being spent on subsidy to primary healthcare, basic education, and rural roads infrastructure.

“This year, Nigeria is on track to spend N3 trillion on PMS subsidy, which is more than it spends on health,” Chaudhuri said.

“I think the urgency of doing something now is because the time is going in terms of retaining the hope of young Nigerians in the future and potential of Nigeria.”

“The kinds of things that could be done right away – the petrol subsidy; yes, I hear that six months from now, perhaps with the PIA(Petroleum Industry Act) coming into effect, this will go away.

“But the fact is can Nigeria even afford to wait for those six months? And there is a choice: N3trillion to PMS subsidy which is depriving states of much-needed revenues to invest in basic services,” he added.

Read also: Nigeria must fix PIA contradictions for full deregulation – industry players

Nigeria is sinking under the weight of petrol subsidy which is set to cost the country some N3 trillion this year, more than the country has spent on capital projects each year since 2016.

The government passed the Petroleum Industry Act (PIA) in August 2021 after many years of dilly-dallying.

Though the law abolishes the petrol subsidy practice, the government has carried on with it despite the drain it has increasingly become on the country’s finances.

However, Zainab Ahmed, Minister of Finance, Budget and National Planning, while speaking at a session at the ongoing NES27 summit said the Nigerian government has made provision for petrol subsidy till the end of June 2022.

“In our 2022 budget, we only factored in subsidy for the first half of the year; in the second half of the year, we are looking at complete deregulation of the sector, saving foreign exchange and potentially earning more from the oil and gas industry,” she said.